ARKANSAS, Dec 09 (Future Headlines)- In a concerted effort to secure Japan’s energy supply and support the energy security objectives of their home country, two prominent Japanese energy companies, Inpex Corp and JERA, have jointly urged the U.S. Federal Energy Regulatory Commission (FERC) to expedite approvals for Venture Global’s CP2 LNG project in Louisiana. This advocacy is substantiated by their strategic agreements to purchase liquefied natural gas (LNG) from CP2 LNG, emphasizing the project’s pivotal role in ensuring a stable and diversified energy supply for Japan.

Inpex Corp and JERA, in separate letters to the FERC, underscored the critical role that the CP2 LNG project plays in fortifying Japan’s energy security. The companies have entered into 20-year agreements to individually procure 1 million metric tons per annum (MTPA) of LNG from CP2 LNG. Inpex further highlighted the endorsement of this position by Japan’s economy ministry, which holds a substantial 21.19% stake in Inpex shares.

The CP2 LNG project, initiated by Venture Global LNG, awaits approvals from regulatory authorities, including the FERC and the Department of Energy, before commencing construction. Inpex expressed optimism for construction to commence in the early months of the upcoming year, emphasizing the urgency of obtaining final investment decision (FID) approval.

Both Inpex and JERA voiced concerns about the potential slowdown in U.S. government authorizations for new LNG export facilities. JERA, which has been actively purchasing U.S. LNG since 2017 and has investments in the Freeport LNG export plant in Texas, highlighted the importance of timely approvals to ensure the seamless progress of CP2 LNG.

The regulatory processes, including FERC approval and subsequent export authorization from the Department of Energy, are critical milestones for the initiation of construction activities. Delays in these authorizations could impact the project timeline, potentially hindering the scheduled commencement of operations.

Venture Global LNG initiated early site work for the CP2 LNG project in the spring of 2023. The project, situated in Louisiana, has contracts covering nearly half of its 20 MTPA capacity. Venture Global LNG anticipates the remaining capacity to be fully contracted before the conclusion of 2023, indicating robust market demand for LNG.

The project has secured significant agreements, including a deal with Germany’s Securing Energy for Europe GmbH (SEFE) to supply 2.25 million MTPA. Additionally, a long-term agreement with Chevron for the purchase of another 1 million MPTA from the CP2 project underscores the project’s attractiveness to international partners.

However, Venture Global LNG is currently entangled in contract arbitration cases with several customers. These disputes revolve around the contention that the company is not obligated to provide contracted cargoes during the commissioning phase of its Calcasieu Pass export plant. The resolution of these arbitration cases adds a layer of complexity to the project’s development.

Inpex and JERA’s commitment to procuring LNG from the CP2 project through 20-year agreements aligns with their broader strategies to diversify energy sources and ensure a reliable supply chain. These long-term agreements provide stability for both buyers and sellers, fostering enduring partnerships that contribute to the sustainability and resilience of global LNG markets.

JERA, in its letter to the FERC, highlighted its track record of purchasing U.S. LNG since 2017 and its investment in the Freeport LNG export plant in Texas. This experience positions JERA as a knowledgeable and invested player in the U.S. LNG market, reinforcing the company’s insights into the significance of timely regulatory approvals for the success of projects like CP2 LNG.

The advocacy from Japanese energy companies for expedited approvals sheds light on the evolving dynamics of the global LNG market and the strategic importance of U.S. LNG projects. The United States, with its abundant natural gas resources, has emerged as a key player in the LNG export market, attracting international buyers seeking diverse and secure sources of energy.

However, the concerns expressed by Inpex and JERA regarding potential delays in U.S. government authorizations underscore the challenges faced by LNG developers in navigating regulatory landscapes. Timely approvals are crucial not only for meeting market demand but also for ensuring the competitiveness of U.S. LNG in a dynamic and competitive global market.

Reporting by Moe Khaled; Editing by Sarah White